Audio 4:11
Huge hike in Queensland electricity prices

Stephanie SmailUpdated
Fri 31 May 2013, 7:00 PM AEST

Queensland's power prices will increase by 22.6 per cent from July. The Queensland Competition Authority has blamed rising network costs and State and Federal Government policy decisions as some of the reasons for the spike.

Transcript

ASHLEY HALL: Queensland's power prices will soar after July with a 22.6 per cent increase announced today. The average household will pay an extra $268 a year for electricity.

The Queensland Competition Authority has blamed the spike mostly on rising network costs and State and Federal Government policy decisions.

Stephanie Smail reports.

STEPHANIE SMAIL: The Queensland Competition Authority says it's the state's biggest hike in electricity prices in the past four or five years.

Malcolm Roberts is the authority's chairman.

MALCOLM ROBERTS: It's very significant rise and we do appreciate this is going to strain many families' budgets. It will also have an impact on businesses.

STEPHANIE SMAIL: He blames growing costs for the price increase.

MALCOLM ROBERTS: There are costs associated with the volatility in the wholesale market, there's costs associated with the carbon tax and uncertainty over the future of that, there are costs associated with increasing bad debts.

STEPHANIE SMAIL: When the Queensland Competition Authority flagged a 21 per cent hike in February the State Government said it was unacceptable. But it's ruled out softening the blow with a household rebate in next week's state budget.

The State Opposition's Curtis Pitt says the decision to freeze prices in 2012 has contributed to this year's big hit.

CURTIS PITT: They are directly responsible for the magnitude of this price rise in terms of being more than just maybe a 10 per cent rise that Queensland families are now going to have to cop.

Amanda Rickman is a hairdresser in Townsville. She says she's packing up her business to work from home in an attempt to reduce costs.

AMANDA RICKMAN: I'm thinking it's just going to be a much better option to be able to cut overheads, still keep the business open, we still love what we do, and be able to survive through this.

STEPHANIE SMAIL: The wider business community says the Queensland Government needs to rethink how much it's spending on improving the existing electricity network.

Nick Behrens is from the Chamber of Commerce and Industry Queensland.

NICK BEHRENS: All the emphasis in recent years has been towards improving reliability, whereas most consumers and most businesses will tell you that, you know, they're comfortable with existing reliability levels but they're not comfortable with the continued price rises they've been experiencing. So we need to transition away from this gold plating of our network.

STEPHANIE SMAIL: The spike in power prices isn't unique to Queensland.

In the past 12 months New South Wales and South Australia have both had an 18 per cent increase in electricity prices. In the Northern Territory they've blown out by 30 per cent.

Erwin Jackson from the Climate Institute agrees expensive network improvements are part of the problem.

ERWIN JACKSON: Right across Australia over the last few years we've seen very significant increases in electricity prices and it has been because we have been undertaking billions of dollars in investment in new infrastructure poles and wires and there's a real debate about how much of that we actually needed to spend. If we'd been smarter and invested, for example, very strongly in energy efficiency over the last decade or so we could have avoided spending a lot of that money.

STEPHANIE SMAIL: The Queensland Competition Authority says policy decisions at the state and federal level have also added to the price.

MALCOLM ROBERTS: If you look at the combination of the carbon tax, the solar bonus, the renewable energy target, it adds up to about 15 per cent of the bill, so that's a significant amount of money. That's the cost imposed if you like by various government policy, state and Commonwealth.

STEPHANIE SMAIL: But the authority also says it's unlikely households and businesses will be slugged with another big increase in the next financial year.

Erwin Jackson says that's an optimistic outlook but it's not out of the question.

ERWIN JACKSON: If we learn anything from the last few years then predicting what happens in the electricity market is highly uncertain. If you'd asked someone five years ago if electricity demand in Australia would be falling they would have laughed at you. Now we are seeing very large reductions in energy demand across the entire electricity network which we've never seen before.

That said, there is some hope that electricity prices will, in real terms, start to fall quite soon, and that will be driven by a range of factors not least the fact that we're becoming more efficient.